Brian Lenihan Jnr (Dublin West, Fianna Fail)

The power would have to be determined by a future Minister for Finance after consulting with the Government. He would have wide powers and he could propose to levy the entire system or could make it more specific to a particular institution.

The fundamental procedure when dealing with a run on a bank is the injection of liquidity back into it by a central bank. As Ireland is in the eurozone, the European Central Bank is the ultimate protection against a run on a bank as it will pump money into the affected bank. The surest remedy against a run on a bank is the continued provision of cash. In this case, we are dealing with the question of solvency and the depositors not being paid. It is not simply a matter of a temporary run on a bank caused by some short-term panic but at a more deep-seated problem in the institution which means it is insolvent.

Under a deposit guarantee scheme, the State ensures savers up to a limit have an absolute assurance their deposits will eventually be paid. The fund exists to meet that liability. If it is insufficient to meet the liability, the Exchequer must top up the fund to the extent required. The question then arises as to how to levy the institutions to recoup the money from them over time. I am attracted by Deputy Burton's proposal that there should be some element of disproportionality in the imposition as the moral hazard is eliminated entirely from the equation if there is an equal levy on all institutions. That will be determined by a Minister making a proposal to the Government under the Act.

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